TORONTO, Jan. 10, 2019 /CNW/ - Pivot Technology
Solutions, Inc. (TSX: PTG) ("Pivot" or the "Company") today
provided its estimated fourth quarter 2018 revenue and gross profit
margin.
Fourth quarter results of operations have not been finalized,
however revenue is expected to be approximately US$310-315 million (compared to US$399 million in 2017, and US$321 million in the third quarter of
2018). The decrease from the prior year was primarily due to
lower sales to major customers. The reduction from Q3 2018 was also
due to lower sales to major customers, partially offset by seasonal
increases in volumes with non-major customers. The Company had
anticipated higher volumes from major customers based on positive
buying signals, however these buying intentions did not translate
into revenue in the quarter as expected.
Fourth quarter gross profit margin is expected to be higher than
the prior periods at over 13%, compared to 12.2% in Q4 2017 and
12.7% in Q3 2018, reflecting improved sales mix (primarily due to
the proportion of sales to non-major customers), and the benefits
of additional cost reductions implemented in the quarter. Gross
margin for all of 2018 is estimated to be approximately 11.5-12%
compared to 11.2% in 2017 on annual revenues of approximately
US$1.4 billion compared to
US$1.5 billion in 2017.
The Company expects to report positive Adjusted
EBITDA1 for the fourth quarter and for all of 2018
despite lower revenue. (1Non-IFRS Measure. See Non-IFRS
Measures section of this news release)
MANAGEMENT COMMENTARY
"During the quarter, we removed
$5 million of annualized costs from
the business, which supported higher margins despite lower product
sales," said Kevin Shank, President
and Chief Executive Officer. "Our cost reduction work will continue
through the first half of 2019 and we expect it to result in a more
flexible and efficient cost structure."
The Company is employing a five-part strategy: (i) continue to
build on Pivot's core business of selling IT solutions, both
products and services; (ii) enhance Pivot's service portfolio and
capabilities, specifically related to services that Pivot delivers;
(iii) continue the Company's commercial transformation to expand
Pivot's addressable opportunities with existing customers; (iv)
improve cost management; and (v) commercialize and monetize the
Smart Edge™ technology.
SMART EDGE™
The Company continued to make progress with Smart Edge™ during the
quarter. In addition to the previously announced agreement
that will see one of Pivot's customers re-sell the Smart Edge™
solution across its network, Pivot signed a funded agreement to
collaborate with a strategic partner for the purpose of integrating
each company's respective edge technologies to accelerate
commercial deployments and use of the Smart Edge™ solution in
multiple industries. This collaboration is also intended to
provide a production ramp for trial deployments.
Smart Edge™ is an innovative developer platform designed to
support enterprise Multi-Access Edge Computing (MEC) solutions.
Through use cases to date, the Smart Edge™ solution has
demonstrated its ability to improve performance, enhance user
experiences and reduce ongoing edge total cost of ownership – all
key factors in customer adoption of 5G technologies. Revenue
generation is expected to grow with the adoption of 5G.
Pivot expects to report its final fourth quarter and audited
2018 financial results before March 31,
2019 and will host a conference call after results are
released to provide additional commentary.
ABOUT PIVOT TECHNOLOGY SOLUTIONS
Pivot is an industry
leading information technology services and solutions provider to
many of the world's most successful companies, including members of
the Fortune 1000, as well as governments and educational
institutions. By leveraging its extensive OEM partnerships and its
own fulfillment, professional, deployment, workforce and managed
services, Pivot supports the IT infrastructure needs of its
clients. For more information, visit www.pivotts.com.
NON-IFRS MEASURES
The term "Adjusted EBITDA" does
not have any standardized meaning prescribed within IFRS and
therefore may not be comparable to similar measures presented by
other companies. Such measures should not be considered in
isolation or as a substitute for measures of performance prepared
in accordance with IFRS such as net income. Adjusted EBITDA is
defined as gross profit less employee compensation and benefits and
other selling, general and administrative expenses, and corresponds
to income before income tax, depreciation and amortization, finance
expense, change in fair value of liabilities, and other (income)
expense. Management believes Adjusted EBITDA is an important
indicator (as it excludes certain items that are non-cash expenses,
items that cannot be influenced by management in the short term,
and items that do not impact core operating performance),
demonstrating the Company's ability to generate liquidity through
operating cash flow to fund working capital needs, service
outstanding debt and fund future capital expenditures.
Adjusted EBITDA is used by some investors and analysts for the
purposes of valuing an issuer. The intent of Adjusted EBITDA
is to provide additional useful information to investors and
analysts and is also used by management as an internal performance
measurement.
FORWARD LOOKING STATEMENTS
This news release
contains statements that, to the extent they are not recitations of
historical fact, may constitute "forward-looking statements" within
the meaning of applicable Canadian securities laws. Pivot uses
words such as "may", "would", "could", "will", "likely", "expect",
"believe", "intend", "anticipate" and similar expressions to
identify forward-looking statements. Any such forward-looking
statements including statements about estimated financial results,
cost reductions and the timing of Smart Edge™ orders are based on
assumptions and analyses made by Pivot in light of its experience
and its perception of historical trends, current conditions and
expected future developments including the assumption that actual
results for Q4 2018 and for fiscal year 2018 will not differ from
estimated results once the fiscal 2018 audit is complete. However,
whether actual results and developments will conform to Pivot's
expectations and predictions is subject to any number of risks,
assumptions and uncertainties, including the risk that actual
revenue and expenses for Q4 2018 and fiscal year 2018 will differ
from estimated revenue and expenses; and the risks detailed in the
Company's Annual Information Form for the year ended December 31, 2017 available at sedar.com. Many
factors could cause Pivot's actual results to differ materially
from those expressed or implied by the forward-looking statements
contained in this news release. The "forward-looking statements"
contained herein speak only as of the date of this news release
and, unless required by applicable law, the Company undertakes no
obligation to publicly update or revise such information, whether
as a result of new information, future events or otherwise.
SOURCE Pivot Technology Solutions, Inc